More Tips on Financially Preparing for Your New Arrival
As you continue planning your finances in anticipation of your new baby, consider these additional areas of concern:
Understand How Much Your Disability Insurance Will Cover
If you have disability income insurance through your employer, double-check to see how much it will cover as a supplement to your maternity leave income. If it doesn't cover at least 60%, you may want to consider purchasing additional coverage. Make sure the up-front cost of the additional insurance is worth the investment and keep in mind that some states also offer this benefit.
Evaluate Your Health Insurance Coverage
Take a close look at your health insurance plan to determine how much of well-baby care will be covered. Examine the details of your delivery cost coverage so that you have some idea of what to expect before those hospital bills arrive. Remember that after your baby is born, you typically have only thirty days to add the child to your insurance plan.
Purchase Life Insurance
While taking on another expense may seem difficult, this is one expense you may seriously want to consider investing in soon. The general recommendation is that the parents of young children should have enough life insurance to cover at least five times their annual salaries. Shop around before you sign up, though, and remember that a simple term-life policy is usually the best choice for most people between 20 and 50 years old.
Start a College Savings Fund
While it may be difficult to imagine right now, your new baby will need those funds sooner than you think. Start a savings plan as soon as possible and be sure to let your family and friends know that they're welcome to make a donation if they'd like. While that sweet little onesie may only last a month, anything contributed to a college fund will help your child obtain a good education that lasts a lifetime. Some of the more common options include a 529 savings plan and a Coverdell education savings account. Do your research to develop the best savings plan for your child, but act as soon as possible. You can find more information regarding these and other college savings options within our Education Resources.
Create a Will
With a new baby on the way, it's even more important to have this document in hand. The most important reason for creating a will now is defining who you want as your child's guardian should anything happen to you. A will also designates a trustee for any inheritance your child may receive. Working with an attorney to create a proper will is typically not very expensive, and having it done right may be well worth the investment. For more about the importance of creating a will, visit our Creating a Will page.
